Kansas: Realtors, bankers bemoan ‘gotcha tax’

Topeka  Numerous bankers lined up Wednesday calling for repeal of the state's mortgage registration fee, saying it was unfair to them and home buyers.

"It's a gotcha tax on an unsuspecting consumer," said Kurt Knutson, founder, chief executive officer and president of Freedom Bank in Overland Park.

Terry Wright, president of GNB Mortgage Co., said the fee is especially harmful to low- and moderate-income families who are low on cash when trying to secure a home loan.

And the bankers told the Senate Assessment and Taxation Committee that they are at a competitive disadvantage with certain government-sponsored lenders, such as the Federal Credit System, that don't charge the fee.

The fee is equal to $2.60 for each $1,000 borrowed on a home mortgage, or $390 for a $150,000 mortgage, although it isn't collected from people who pay cash for real estate.

But county officials across the state, including Douglas County, said revenue lost from repealing the fee would have to be made up somehow.

In Douglas County, the fee generated about $1.8 million last year, and officials estimate a 2-mill rise in property taxes would be needed to replace that money.

Douglas County Clerk Jamie Shew said repealing the fee could lead to increased property taxes on people who are on fixed incomes and own their homes.

Bankers also claimed that few states charge this fee.

But Shew said states that don't have a mortgage fee make up for it with other charges.

The hearing on Senate Bill 298, which would repeal the fee, was scheduled to continue Thursday.